Quickly Increase Your Average-Order-Value

By Sean EvankoJuly 18, 2013

TOPICSGoogle, Product Ads

Have you ever managed a PPC account that saw great conversion metrics, but revenue failed to meet goals? Conversion rates are up, cost-per-conversions down, total conversions are increasing year-over-year and yet your revenue is decreasing? A possible culprit may be a sinking average-order-value (AOV).

There are a few possible causes for a declining AOV:

Current promotions and sales

A high AOV product goes out of stock

A competitor begins selling your high AOV product at a more competitive price

It is important to explore both internal and external factors to find the root cause of the decline.

Recently a client of ours saw a declining average-order-value which was negatively affecting their overall profit. This decline coincided with a 50% off + an extra 10% off site-wide sale. In addition, summer is a seasonally slower time of year for the client. Combine the low AOV with the low season and something needed to quickly change to keep revenue on pace to exceed the year-over-year profit expectations. We recommended stopping the current promotion and replacing it with a threshold sale. A threshold sale offers a discount or incentive when a visitor completes a purchase over a specified amount. For example:

20% off orders over $150

Free shipping on $50+ purchase

Our client launched their new threshold sale and within four weeks, their average-order-value increased 63%. To put this in perspective, that is more than 50 additional dollars per order — a significant amount. All other metrics remained consistent. Not only did the AOV increase, but this was accomplished without the need to offer discounts on all purchases.

If this is a trend you are seeing in your account, investigate to find the root cause. If you discover that your average-order-value is declining, experiment with a threshold sale. The results could make a huge difference in a relatively short amount of time.

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